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Bridging the credit gap: SEC spearheads crowdfunding revolution for MSMEs

The Securities and Exchange Commission (SEC) is stepping up its efforts to foster the growth of micro, small, and medium enterprises (MSMEs) by promoting the use of crowdfunding platforms as an alternative financing avenue.

With a credit gap estimated at around $220 billion, the SEC recognizes the need to expand the funding options available to small businesses.

To address this challenge, the SEC has launched a nationwide campaign in the form of roadshows focused on capital market formation for MSMEs and startups.

These roadshows, which commenced in February, have seen enthusiastic participation from over a thousand entrepreneurs based in Metro Manila, both in-person and online.

SEC Commissioner Karlo Bello acknowledges the hurdles faced by small businesses when seeking traditional bank loans, including cumbersome documentation requirements, high interest rates, and collateral demands.

The economic slowdown caused by the COVID-19 crisis has further exacerbated the financial difficulties faced by MSMEs. In response, the SEC aims to facilitate financial inclusion by diversifying the available financing instruments for these enterprises.

Among the options being championed by the SEC is crowdfunding, a fundraising method that allows startups and SMEs to gather support and funding from the public through online platforms.

This alternative approach to raising capital offers accessibility and convenience, providing MSMEs with an avenue to secure funds for business expansion and innovation.

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